Cost Drivers and How To Steer Them

The cost of pharmaceutical drugs is one of the leading causes of expensive health care, according to testimony last week at a state Senate Committee on Health hearing examining the biggest cost drivers in California's health care system.

"We've managed the utilization side of things about as much as we can," said Ian Lewis, a senior research analyst at Unite Here Local 2, a union for workers in the hotel and restaurant industry. "But utilization is just a piece of [the cost of health care], and it's not the biggest piece, not by far."

Lewis said there were two factors that, in his opinion, were driving the cost of health care higher. "Physician fees and drug fees make up 80% of the rising trend we see," Lewis said. "Our state needs to do more, and do more quickly."

Amy Shin, CEO of Health Plan of San Joaquin, a publicly funded health plan serving San Joaquin and Stanislaus counties, said it has been increasingly difficult to control costs because the health plan has no control over two major costs.

"The major cost drivers are inpatient services and pharmaceuticals," she said.